hi Danny,
i thought your lecture during CAF on The Dow Theory was excellent! and the application/illustration of Confirmation of Averages was even better since i keep wondering why it was taught to us but at the same time nobody
seemed to pay any attention to the transports. so i got the impression that maybe The Dow Theory was taught to us merely as a history lesson to explain the Technical Analysis tenets and maybe not for actual application (using DJIA+DJTA for confirmation).
...but i have a question about your expanding triangle because i thought the reversal on the DJTA looked like a double-top.
Double Top:
- peak 1 5487.05
- peak 2 5536.57
- trough 4032.88
Expanding Triangle:
- 3 successively higher peaks 5013.67, 5487.05, 5536.57
- 2 declining troughs 4134.72, 4032.88
- expanding volume
the problem i see w/ the double top argument is that the volume doesn't diminish in the 2nd peak compared to the volume of the 1st peak.
but could i argue that since this is a secular pattern and the peaks & troughs are complex (like the right peak could be a H&S reversal like you pointed out in the CAF, the trough an inverted H&S) it won't follow textbook volume patterns?
at the same time, the expanding triangle seems to have all the ingredients except the 3rd successive peak doesn't reach the expanding triangle's upper trendline and is only barely higher than the 2nd peak...is this negligible?
ok...that's all. thanks!!
